Precautionary saving in Spain during the great recession: evidence from a panel of uncertainty indicators
Alba Lugilde (),
Roberto Bande () and
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Alba Lugilde: Universidade de Santiago de Compostela
Dolores Riveiro: Universidade de Santiago de Compostela
Review of Economics of the Household, 2018, vol. 16, issue 4, 1151-1179
Abstract The aim of this paper is to empirically study the effect of uncertainty on private consumption using a sample of Spanish households, and therefore, to test the existence of a precautionary motive for saving. Using data provided by the Spanish Survey of Household Finances and the Labour Force Survey we construct several uncertainty measures that are commonly used in the literature and an additional indicator based on job insecurity data, and we consequently estimate different econometric models under the life-cycle/permanent income hypothesis, including these measures of uncertainty. Our results are twofold: first, we find evidence in favour of the precautionary saving hypothesis. Secondly, we find that, unlike other variables related to the performance of the labour market (such as the unemployment rate) the job insecurity indicator is an appropriate variable to approximate income uncertainty in any macroeconomic context.
Keywords: Precautionary savings; Uncertainty; Consumption; Survey of household finances; E21; D12; D14 (search for similar items in EconPapers)
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Working Paper: Precautionary saving in Spain during the Great Recession: evidence from a panel of uncertainty indicators (2016)
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